look news india
Mumbai: Confused by the RBI's announced norm of providing credit card recipients the option to choose the card network, banks are seeking some clarification from the RBI on this issue. The new RBI norm is coming into effect from September 6, 2024.
Through a guideline issued in March, the Reserve Bank has made it mandatory for banks to provide credit card applicants an option to choose a network.
Banks and financial institutions will have to give customers a choice of network at the time of issuing and renewing cards. However, banks are arguing that enforcing this rule at the time of renewal may disrupt business operations.
Existing cardholders are being offered a range of customer benefits like Rs 2019, co-branding arrangement and pricing benefits.
The Reserve Bank has not clarified whether the new rules will apply to co-branded cards. Indian Banking Association sources said long-term contracts with co-brand partners and the impact on fees and other benefits to cardholders are complex issues that need to be considered.
The RBI guidelines state that banks and non-banking finance companies issuing credit cards shall not enter into any agreement with a card network which results in non-availability of services of other card networks.
The RBI move comes following the fact that the existing arrangements between card issuers and card networks are not favourable enough to offer choice to consumers.
Networks with less than 10 lakh active cards are excluded from this standard. Currently, the number of credit cards in the country is more than 10 crore.
